COMPANY NEWS

COMPANY NEWS; Buyout Firm Joining American Medical Bid

By MICHAEL LEV, Special to The New York Times

Published: June 6, 1989

LOS ANGELES, June 5—
A New York leveraged buyout firm said today that it had joined the group offering $1.8 billion for American Medical International Inc., the Beverly Hills-based hospital and health-care company.

Clayton & Dubilier Inc. said it had responsibility for the $24-a-share bid, consisting of $21 in cash and $3 in preferred securities. The offer was originally put forward by M. Lee Pearce, a Florida doctor who owns 10.29 percent of American Medical, and Shamrock Investments, a Los Angeles firm headed by Charles P. Reilly, a former executive at the hospital company. Shamrock Investments is not related to Shamrock Holdings, the Disney firm.

Martin H. Dubilier, Clayton & Dubilier's chairman, said the new bid is identical to Dr. Pearce's but is more credible because ''the financing is more in place.''

Members of Clayton & Dubilier's buyout group have committed $250 million to the venture and have pledges from Drexel Burnham Lambert Inc. and Kidder, Peabody & Company to finance the rest of the offer. The deal also calls for the assumption of $1.4 billion in debt.

Suzanne Hovdey, a spokeswoman for American Medical, said the company viewed today's announcement as a confirmation from the Pearce group that it had the financing to strike a deal.

Nevertheless, Ms. Hovdey said, the hospital company remains neutral about whether to accept this offer or an alternative: a company restructuring. Under the company's proposal, stockholders would receive an unspecified cash payment, and total shareholder value would be in the range of $25 to $29 a share.

Ms. Hovdey said the company expects to receive other bids, perhaps one from three members of the Bass family of Texas, which owns 11.9 percent of American Medical. Spokesmen for the Bass family declined to comment.

In trading on the New York Stock Exchange today, American Medical closed at $21.75, up 25 cents.

Mr. Dubilier described the bid as friendly and said his group was willing to consider a higher price if the two sides could negotiate. He said he had an appointment to meet with the company Wednesday. The new offer expires on June 15.

Clayton & Dubilier said it has sponsored 15 leveraged buyouts since 1978, including the $960 million purchase last year of the Colgate Palmolive Company's Kendall Company. A leveraged buyout is an acquisition financed by debt that is secured by the company's assets.

American Medical, which owns or operates 79 acute-care and psychiatric hospitals in the United States and abroad, has been the focus of investor attention since last summer, when Walter L. Weisman resigned as chairman and chief executive amid unhappiness at the pace of his efforts to improve profits and raise the company's stock price.